International Aviation: an opportunity for growth and jobs in the EU aviation sector

Brussels, 7 December 2015

Today, the European Commission has adopted an ambitious package of proposals to negotiate EU-level comprehensive aviation agreements with key partner countries.

Today, the European Commission has adopted an ambitious package of proposals to negotiate EU-level comprehensive aviation agreements with key partner countries. They include the Association of South East Asian Nations (ASEAN) States, Gulf Cooperation Council (GCC) States, Turkey, China, Mexico and Armenia. In parallel, authorisations to negotiate dedicated aviation safety agreements with China and Japan are also being sought and arrangements for One Stop Security with Canada and Montenegro are being established.

The aim is to boost the international competitiveness of the EU's aviation industry and ensure high quality services for the passengers. Once signed, nearly 75% of all passengers flying in and out of the EU, or more than 240 million passengers per year, would be covered by EU-level aviation agreements. These agreements will strengthen the global positioning of the EU, which is a core priority of President Jean-Claude Juncker.

EU-level aviation agreements

Traditionally, international air transport has been governed by bilateral air services agreements between States, creating a patchwork of differing market access and rules for airlines. Therefore, since 2003 the EU has developed an external aviation policy aiming at concluding comprehensive aviation agreements and aviation safety agreements between the EU and key aviation partners worldwide for the benefit of consumers and industry.

Comprehensive aviation agreements and aviation safety agreements create new economic opportunities: they ensure market access and promote investment opportunities, facilitate air travel and provide a wider choice for consumers. These agreements also aim to ensure high standards of safety, security, air traffic management, infrastructure, consumer, social, and environmental protection, notably through regulatory dialogue and cooperation.

The EU has already concluded comprehensive aviation agreements with the United States and Canada, and is currently finalising one with Brazil. It has also concluded aviation safety agreements with the United States, Canada and Brazil. There are also comprehensive agreements with neighbouring States, which aim at establishing a fully open Common Aviation Area through regulatory convergence with the final goal of full implementation of EU aviation legislation and market access to the EU, including for intra-EU routes. Such agreements have been signed with the Georgia, Israel, Jordan, Moldova, Morocco and the Western Balkan States. A Common Aviation Area with Ukraine is pending signature since 2013.

1. Association of South East Asian Nations (ASEAN)

ASEAN is a regional organisation of Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Combined it is the EU's 3rd largest trading partner outside Europe. More than 11 million passengers travelled on direct flights between EU destinations and destinations in the ASEAN region. ASEAN is a fast growing aviation market and currently in the process of creating a Single Aviation Market for its population of more than 600 million. In the field of aviation, the EU and ASEAN already engage in technical cooperation activities and jointly organised a successful ministeral aviation summit in 2014. A comprehensive aviation agreement between the EU and ASEAN is the logical next step to create a close aviation partnership with a combined market with a population of 1.1 billion. Besides further market access, advancing mutual aeropolitical interests and fostering regulatory cooperation will be key aspects of the agreement. It would also be the first EU bloc-to-bloc aviation agreement.

The agreement would create commercial opportunities for enhancing direct flights to ASEAN destinations. While demand for air travel between the EU and ASEAN is growing fast, nearly all the growth is currently channeled through indirect routings.

2. Gulf Cooperation Council (GCC) States

The GCC region, and notably the UAE and Qatar, is among the most dynamic and fast growing aviation markets in the world. The airlines and hub airports of the region are reshaping the global competitive pattern of aviation and benefit from a favourable geographic location, highly liberal bilateral air services agreements, and political choices by local governments to invest in aviation as a strategic economic sector. The impressive results of a determined external aviation policy are best illustrated when comparing the numbers: More than 25 million passengers travelled on direct flights between EU destinations and destinations in the GCC region. The United Arab Emirates (UAE) has more direct traffic with the EU than China, India and Japancombined.The total number of seats available on scheduled flights between the EU and the six GCC States has increased from 12 million in 2005 to 39 million in 2015. The sizes of the markets however differ considerably between the EU and individual GCC States: The EU-UAE market for instance is the 6th largest extra-EU market with 18.2 million annual passengers while the EU-Qatar market amounts to 4.4 million passengers, the EU-Saudi Arabia market totalled 1.4 million and the EU-Bahrain, EU-Kuwait and EU-Oman markets are in the order of 0.5-0.6 million passengers.

While the additional connections provided by the Gulf airlines are welcome – there are concerns regarding the conditions under which they operate. Comprehensive aviation agreements between the EU and the GCC States would be the right way forward to bridge the interests of both sides by creating conditions that will allow further market development and growth based on common rules and transparency. Both sides' airlines, airports and passengers would benefit from enhanced regulatory cooperation and convergence in areas such as aviation safety, aviation security and economic regulation.

3. Turkey

Turkey is a candidate country for EU Membership and with a population of more than 75 million, a key regional player in the aviation sector, being one of the most strategic and fast-growing markets in Europe. After the US, it represents the largest destination for passenger traffic to and from the EU, with almost 40 million passengers in 2014.

Concluding a wide ranging aviation agreement between the EU and Turkey would bring significant mutual benefits, in terms of market access, regulatory convergence with the EU aviation acquis, facilitation of closer cooperation and ensuring a level playing field in the EU-Turkey aviation market. Concluding such an agreement would create opportunities for both industries to increase routes, frequencies and capacity between the EU and Turkey. Regulatory convergence will also be promoted across areas related to market access, air traffic management, aviation safety, aviation security, environment, social aspects, and consumer protection. The full implementation of the EU aviation acquis by Turkey is the ultimate objective for regulatory convergence.

4. China

China, with a population of around 1.4 billion, is one of the fastest growing aviation markets in the world and currently the 11th largest extra-EU market with more than 7.2 million annual passengers. Decades of a soaring Chinese economic growth have boosted domestic consumption and the demand to travel in, and increasingly beyond, China alike.

Since 2013, the EU and China have significantly enhanced their aviation relations – a development best illustrated by a new aviation partnership project which has just been launched. The proposed comprehensive aviation agreement would be the next step to enhance aviation relations between the second and the third largest domestic aviation markets in the world. Further market access offers a strong potential for growth for airlines, aircraft manufacturers and service providers on both sides. An agreement would provide the framework for more andbetter direct connections and bring significant economic benefits and further facilitate trade and tourism flows to both sides.

China and the EU share an interest in intensifying regulatory cooperation and convergence in order to tackle problems such as congestion in the air and on the ground, safety and security related issues, as well as the environmental impact of aviation. Therefore these issues would constitute important topics to be addressed in addition to slot management and access to Computer Reservation Systems (CRS). On top of this, a comprehensive agreement could represent an important building block to ensure a level playing field for air carriers operating in EU-China markets and provide an effective framework to address doing business issues.

5. Mexico

Latin America's second largest economy, with a population of more than 120 million, is an important regional and global player. Mexico is also the EU's remaining key aviation partner in North America which has not yet signed a comprehensive aviation agreement and an important external aviation market of more than 3.3 million passengers in 2014.

Air transport between the EU and Mexico is driven both by tourism and business. Strengthening air transport links between the EU and Mexico will facilitate trade, investment, tourism and people-to-people exchanges. The envisaged market access would match the demand of the travelling public and for cargo services and would generate significant economic benefits for both sides, mostly in consumer surplus, through increased direct employment and increased tourism activities.

A comprehensive aviation agreement between the EU and Mexico would reinforce regulatory convergence aimed at high standards of safety, security, environmental and consumer protection for air services. Industry in both the EU and Mexico would benefit from closer cooperation between the regulatory authorities.

6. Armenia

In 2014 some 230.000 passengers travelled between the EU and Armenia. To further enhance direct connections based on common rules, the European Commission proposes negotiating a Common Aviation Area Agreement. A parallel process of reciprocal market access and regulatory convergence towards full implementation of the EU aviation acquis is foreseen. The closer cooperation aimed for is in line with the existing policies both in the field of aviation and regarding the EU's neighbourhood policy.

The agreement would complement the Common Aviation Area which the EU is developing with neighbouring countries.